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3 Top Tech Dividend Stocks for 2012

Written by: James Rogers06/18/12 - 2:29 PM EDT

Tickers in this article:
DELL MSFT INTC AAPL CSCO CY

NEW YORK ( TheStreet) -- With Dell(DELL) becoming the latest tech giant to perform an about-turn in its dividend strategy, tech sector dividends are once again in the investor spotlight.

The no. 2 PC maker may have grabbed most of the headlines when it announced plans for a quarterly payment of 8 cents per share last week, but experts say that Microsoft(MSFT) , Intel(INTC) and Cypress Semiconductor (CY) are the key tech dividend stocks.

Ratings agency Moody's cites Microsoft as the tech dividend leader after making more than $5.7 billion in dividend payments in 2011, although Apple(AAPL) is expected to surpass the software giant after reinstating its dividend following a 17-year hiatus. The iPhone maker plans to institute its quarterly payment sometime in its fiscal fourth quarter, which begins on July 1, 2012.

Dell(DELL) and Apple(AAPL) , of course, are just the two latest tech firms rethinking their dividends. Cisco(CSCO) , initiated its first-ever cash dividend in 2011, as did Lexmark(LXK) and Intuit(INTU) . Hard drive maker Seagate(STX) also reinstated its dividend in 2011.

Doug Freedman, an analyst at RBC Capital Markets, says that the popularity of dividends reflects the growing maturity of many U.S. tech companies. "The growth in their business is not consuming all of their cash now," he told TheStreet. "In the old days, they were growing so fast that they needed every dollar they could get their hands on to grow their business."

"Dividend payments by rated U.S. technology companies will rise again in 2012," explained Moody's analyst Richard Lane in a recent note. Moody's expects that these companies' dividend payments will approach $26 billion in 2012, up 14.3% from 2011.

In addition to traditional tech stocks, investors looking for strong dividend plays should also consider telecom giants AT&T(T) and Verizon(VZ) , which both offer impressive yields.

Read on for more details on tech's top 3 dividend stocks:

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Microsoft

Market Cap: $250.22 Billion

Share Price: $29.78

The software giant jumped into dividends with an annual payment in 2003, and has subsequently earned plaudits for its quarterly returns to shareholders. Moody's ranks Microsoft no. 1 in its list of top-rated technology common dividends, ahead of Intel, IBM(IBM) and Cisco, citing its $5.7 billion return in 2011, a figure which is expected to reach $6.7 billion next year.

Microsoft's dividend yield, which reflects its dividend payment in relation to its share price, is currently 2.69%. While this is not the largest yield in Silicon Valley, experts say that the tech giant's dividend strategy is still worthy of investor attention.